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Report: Michigan's tax burden below national average

May 2, 2016

Not many people like paying taxes, but at least Michigan residents get to say "it could be worse." 

Citizens Research Council of Michigan's new report shows the state ranks 35th in state and local tax burden compared to the other states in the U.S. and Washington, D.C., according to data from 2013. 

Michigan was among the top ten states nationally for property tax burden 30 years ago, but is now 26th for per capita property tax revenue, the report said. 

"I think most people would be surprised to think that Michigan's comparative ranking versus other states has changed that much," said Bob Schneider, one of the authors of the report.

Schneider said two factors primarily caused this shift: changes in the law around 20 years ago, and the housing crisis of 2008.

Specifically, Prop A of 1994 made a huge impact on state and local revenue, Schneider said. The measure reduced property taxes while increasing the sales tax by two cents, among other things. With all of Michigan's tax limitations, Schneider said the crash of 2008 hit the state particularly hard as property values declined. 

Whether this is a good or bad trend for Michigan depends on your ideology: on the one hand, it keeps more money in residents' pockets; on the other hand, there's less money for government services.

And local governments have felt the shortage, said Eric Lupher, President of the Research Council.

As the road conditions worsen, local police departments have cut officers, and utilities become less reliable, Lupher said the shortage of public money could counteract any of the incentives for businesses.

"To be a low-tax state should be attractive to people who are hoping to come and relocate, either for business purposes or to raise a family," he said. "(But) if they don't feel safe because the police services are not at the par they are set by other states, if the parks are not safe to play in, if the libraries are not available to them, that's going to affect their location decisions as well."

Schneider said they also found per-capita tax collection from 1993 to 2013 largely held steady with inflation. Meanwhile, the national tax burden increased on average.